Recent economic reforms have helped the Egyptian market regain the global investment’s attention, said the deputy chairperson of Banque du Caire, Soha Soliman.
Daily News Egypt held an interview with Soliman where she pointed out that the continuation of reform measures with the aim to increase foreign direct investments (FDIs) and domestic investments are the two most important challenges facing the Egyptian economy at present.
She stressed that the Central Bank of Egypt’s (CBE) decision to float the exchange rate was important and represented a qualitative leap for the Egyptian economy. She added that the banks operating in the local market have played a vital role in supporting the Egyptian economy during hard times experienced by the state, not to mention their community responsibility.
How do you see the progress of the economic reform programme since the last Euromoney Conference in September 2016?
The economic reforms taken by the Egyptian government, most notably the CBE’s decision to float the pound exchange rate against foreign currencies in November 2016, have helped the Egyptian market regain the global investments’ interest.
The Euromoney Conference plays a significant role in presenting the investment opportunities in the Egyptian market, which, at the same time, attracts foreign capitals.
The conference also represents a good opportunity for the global business community to follow up the current state of investment in Egypt after the brave economic decisions taken recently by the Egyptian government. The conference also increased the interest of private sector in Egypt and the strong return of the bonds market.
How do you see the state of the Egyptian economy at present, and what do you expect in the future?
The Egyptian economy is witnessing a noticeable improvement in terms of economic performance indicators related to foreign investment flows.
These indicators are expected to continue rising in terms of GDP growth and demand on domestic product, both of which have witnessed a development of its competitiveness in the domestic and foreign markets. In addition, the local product has now the ability to replace imported products, whose prices increased significantly after the CBE’s November decision.
The GDP growth is expected to reach between 4.6% and 4.8% during the current fiscal year, compared to 4.1% in the last one.
Do you think there are challenges still facing the Egyptian economy to recover, and how can they be overcome?
Continuing reform policies and measures with the aim of increasing FDIs and domestic investments are the two most important challenges facing the Egyptian economy, especially with the beginning of the return of tourism inflow to some tourist areas, which contributes to the growth of the GDP and creates new jobs. It also provides incentives to investors through legislative amendments and laws that support investment in Egypt.
The latest report issued by the United Nations Conference on Trade and Development (UNCTAD) said that FDIs in Egypt increased by 17% in 2016 reaching $8.1bn.
A total of foreign exchange reserves of $36.1bn is considered a strong message to everyone that Egypt is a country capable of honouring its promises and sends a message to foreign investors to come to Egypt.
In addition, the increase in tourism revenues to about $1.3bn from January to March 2017, a growth rate of 128.3% compared to the same period in last year.
In your opinion, what is required to push the Egyptian economy to grow strongly? What activities or projects can help the Egyptian economy to revive quickly?
The revival of Egyptian economy requires the increase of economic resources and implementation of many national projects as a tool to achieve the goals of sustainable development.
The Egyptian government currently adopts several policies supporting micro, small, and medium enterprises (MSMEs). These projects have the ability to absorb a large number of workers through the provision of competitive financing systems, providing the necessary training and qualification for the owners of these projects.
The small and medium enterprises (SMEs), which attract the attention of all state institutions, have a great importance on the road of achieving comprehensive economic renaissance.
We should also benefit from other countries’ experiences in achieving comprehensive social renaissance, such as Kenya and Malaysia, which their small industries represent 70% of the economy.
The micro-credit product is vital in many countries, including Mexico, the US, Taiwan, and China, where the proportion of exports produced from small enterprises account for 60% compared to 4% in Egypt.
How did the flotation effect the performance of banks?
The flotation of the exchange rate was an important decision, and it would ensure a qualitative leap for the Egyptian economy to put it among the world’s largest economies.
This decision was a challenge that should have been faced with no delay, because the economy did not have the luxury anymore of continuing under the old form of foreign exchange management.
The flotation was a challenge for the state that should have been faced with no delay, especially after the decline of the local product’s competitiveness against the imported product. This is not to mention the decline of Egyptian exports’ competitiveness in global markets. This position was expected to lead to further decline in economic growth and the standard of living of the people and the increase of unemployment rates.
What is the expected role of banks in supporting the Egyptian economy?
The banking sector plays an active role in supporting the national economy, especially during the hard times experienced by the state.
This role became clear after the 25 January Revolution, when banks did not stop filling their automated teller machines (ATM) in all governorate branches despite the absence of security at the time. In addition, the banks issued the Suez Canal certificates to complete the national project.
The banks also play an important role in community development, such as financing projects of drinking water supply and roofing houses of the neediest villages, in addition to supporting all national projects to push the economy and increase employment rates.
The banking sector focuses on improving the investment climate and the development of MSMEs, which is an important development locomotive in emerging economies.
Banks also offer their help to serve companies and entities that intend to invest in a certain project in terms of preparing economic studies to determine the capital to be invested and expected return on investment.
Financial inclusion is one of the most important fundamentals in the spread process of financial and banking culture in the Egyptian society. It requires spreading awareness about some concepts, mainly to maximise banks’ role in the comprehensive development through attracting the informal economy to enter the official economy.
With regards to Banque du Caire, what projects and activities are focused more to serve the economy?
Since its establishment, Banque du Caire has been serving the Egyptian economy and working to increase its profits and achieve good performance indicators.
Banque du Caire is keen to inject more funds into various vital sectors in the country. The bank is keen to finance the oil and gas, electricity, food industry, real estate, and construction sectors, as well as financing operations in many sectors including energy, transportation, logistics, and construction. The banks also initiated a sector to serve SMEs.